Received this unsolicited mail drop today. Surely there must be regulations against this farce? 535.5%!! And they even go for the half a percentile!! But wait, there's more. They'll even visit 'EVERY WEEK' to collect payment. This will see a return to the days of heavyweight boffins crashing down unanswered doors and threatening families. (part timer for @Nytol?) I have confessed my inadequacies in mathematical calculations, but could one of you gurus post an illustration of payments and total to be paid for, say, £1,000 over five years?
As far as I know it's still got financial problems itself!! Good...I hope they go bust...they only target the poor... Wipe your bum on it Nige and post it back http://www.bbc.com/news/business-43209185
I'll have a go Nigel only because I'm extremely bored. 535.5% APR means you are paying back 535.5% interest on top of the loan amount (capital) every year. The capital is simple, you are paying £1000 off over 60 months which is £16.67 a month. As your capital reduces over the 5 years the interest adjusts also as you are paying 535% on what you still owe and not what you started with. Not sure if the interest is calculated monthly or annually I cant see on that letter. Let's say its calculated annually. So the first year your interest on the initial £1000 is £5355. Then each subsequent year the interest will be calculated on the outstanding value of the loan. So.... Year 1 interest would be £5355 Year 2 interest would be £4284 Year 3 interest would be £3213 Year 4 interest would be £2142 Year 5 interest would be £1071 So those are your interest repayments over 5 years based on it being calculated annually. Added together that's £17065 in interest and £1000 in initial capital. So for 60 equal payments that's £301 a month. These high APR pay day loans aren't meant for paying off over 5 years though and I think the interest is probably calculated weekly rather than monthly or annually. Its described as annual percentage rate for comparison purposes and by law. There is also compound interest to contend with....interest on the interest. That is where I got lost. (Just my understanding, I am not a financial guru )
Who cares If you take it out without reading you deserve to pay and should pay. I hate these people who have thousands, have a great time and then say they can’t pay it back and get let off Or the people claiming poverty and food banks and children have no food but every cu## in the house has a mobile phone including 3 year old little Johnny
Thanks Charlie. Glad to relieve your boredom! That's a staggering amount and more than I expected, although I'm not surprised. It seems that sort of operation would apply daily interest, hence the weekly collector being able to keep on their back and even add on to the original loan - leaving the lender in a forever downward spiral. Just after my marriage, erm, the first one, I purchased a lot of household items/furniture etc, on what I thought were reasonable credit terms. Tied me up for years! Many of us have been there, I guess. But the likes of this operation by Provident, as it appears to me, is to offer short term relief with resulting long term pain. The low wage earner who lives pay-to-pay is the most vulnerable. And in today's society where wages/salaries are often paid fortnightly or monthly, there is a greater risk of a person needing those few quid 'to tide me over'. This practice should be stopped forthwith. Frig, I am so incensed about it, I am sending Provident's letter with a covering letter to my local MP. The thing is, Bazz, is that the vulnerable get hoodwinked by these companies, hence the 'convenience of your own home application process.' The potential borrower then faces the silky smooth salesman (and I was once one of them) who maps out how easy it is to save just 80p per day toward their weekly repayment. 'You'll have your bills settled and not have to live in a stress zone. You family will be happier, blah, blah, blah.' So the potential borrower thinks to him or herself: What a nice helpful man (rarely a woman because a woman has more compassion for society) I'll sign right away. Doesn't bother about reading ANYTHING and only does so months later after being advised of their defaulting. Friggin' arses. I'm going for a lie down!
As said these loans aren't really meant to be long term. The representative rate they show will encompass the rate charged to weekly/monthly loans and so bears no real representation to a more standard 2-5 years period. Whilst the headlight rate is high is will be on a par or cheaper than that charged by the banks for unauthorised overdrafts, and those who need these loans are normally barred from overdrafts or are completely outside the normal banking structure. It isn't great but it does give people an option, and remember these loans are from businesses and not charities.
I have no argument with a business turning a profit, and even a handsome profit. But I still see this as borderline extortion. The people who exercise this option are generally those who don't have access to overdraft, or they're on a maxed out credit card. We could say that they are therefore ineligible for any sort of loan, but then along comes a company such as Provident, under the guise of 'We've been helping customers for over 135 years' and presto, the loan's approved. It's the simplicity of the application process that's partly at fault here, because the potential borrowers sees this debt resolution opportunity as a positive of receiving money and not as a negative of accruing debt. Some weeks pass and the borrower has difficulties with meeting repayments. the friendly 'collector' increases the loan and the borrower spirals further into debt, resulting in stresses on both borrower and family, and in one instance, murder: https://www.mirror.co.uk/news/uk-news/man-who-brutally-stabbed-debt-13652673 Perhaps I am over-passionate about predatorial opportunists, but I stand by my views. Aforementioned letter to local MP has been written and posted.
So if you remove the option of companies like this what do the people who use them now do on the future? You can default on a loan from Provident and take the hot on your already poor credit record, the hit from loan sharks will be much worse and longer lasting. Not saying it is perfect but until there is a viable alternative I wouldn't want to see it banned or regulated to such an extent that all the companies pull out of the market.
That's a waste of time and a stamp...you'd a been better off getting a milk shake and telling them personally
I'm not necessarily banging for companies such as this to be removed, but as I mentioned in my letter to the Honourable Member Zahawi: 'Might there be support of your parliamentary colleagues to discuss/introduce a percentage rate ceiling on such ‘convenience’ loans?' If such were introduced, loans businesses would still prosper (though not to the same extent) and potential borrowers would still have the same 'convenience' of in-home service. Surely a rate capped at, say, 100%, whilst still extraordinarily high, could be seen as manageable by both lender and borrower? Remember I'm in West Mids, and Warwickshire at that. The home of Shakespeare, society, eloquence, et al. Sometimes I wonder how I fit in here, but I must uphold the standards.
